Rove Blames the Economy Melting Down on Fannie and Freddie
First question, why is this man on my television screen instead of sitting in a jail cell somewhere? Karl Rove first claims that the stimulus package didn't work even though as Pat Garofalo over at the Think Progress' The Wonk Room noted:
...the Congressional Budget Office found that it has created or saved 600,000 to 1.6 million jobs, with plenty of punch still to come.
Rove is then asked by Greta Van Susteren if the Bush administration is responsible at all for the shape the economy is in. Rove tries to blame the economy melting down on Fannie and Freddie and on Chris Dodd and Barney Frank--it's all their fault! This is the same crap Rove was peddling in his Wall Street Journal column back in January. Barry Ritholtz does a nice job of debunking Rove's nonsense here--Karl Rove’s Factually Challenged Housing Revisionism.
VAN SUSTEREN: Here's the problem with what you suggest. I mean, that may be the suggestion for the economy, and I don't mean to suggest that decisions are made on politics. But to be sort of practical and realistic, the fact that there will be an election next November, if they cut the corporate tax, as you say, for big corporations, accelerate depreciation for small businesses, the first thing I would do as an opponent is saying, Well, he finally came around to the Republican thinking. And it took him a year or so or a year behind the ball on this in terms of the role of the recession. Plus, we've spent all this money in the stimulus package and we've got ourselves now in a huge spending situation. So you know, that solution may help the economy, but doesn't that make him more vulnerable politically?
ROVE: Well, it does say that he changes course. But I mean, look, it's not working. We were told that if we did nothing, unemployment would go to 8 percent. We did exactly what the president wanted, his $787 billion stimulus bill, and unemployment has gone to 10 percent. We've gone from a situation -- when he came into office, there were 142.1 million Americans working. Today there are 138.5 million Americans working. We did what he said and it has not gotten appreciably better.
And at some -- look, this -- and this may be beyond his control. There's an interesting article today in The Wall Street Journal about the Federal Reserve Board chairman -- excuse me -- president in St. Louis who suggested that we may have a new paradigm, that we had a jobless recovery in the '90s, a jobless recovery following 2001, and we may now be in our third jobless recovery, this one the most jobless of all. But we may -- we may be in a new paradigm of how the economy reacts to circumstances like we find ourselves in.
VAN SUSTEREN: And I suppose there's also sort of the added promise that so many companies have cut jobs and they have found out that they can sort of push their workers a little bit harder and be a little more efficient, so they don't necessarily have to expand, and with sort of all the uncertainty in terms of the tax code or in terms of the economy, that they don't want to take any big steps in terms of their businesses. So it really -- I mean, the fact of a jobless recovery is -- I mean, that's where we are. And it seems that it's going to be hard to get out of that.
ROVE: Well, and look, we -- the government's borrowing a lot more money, and as a result, the private sector is making fewer loans to businesses. We've had private lending from banks go down like this, while government borrowing from -- in essence, by issuing debt and getting people to buy it, has been going up like this. We're seeing a process of crowding out. And we know that we need to have investment if we're going to make the economy more efficient, more productive and grow.
VAN SUSTEREN: Karl, in light of the fact that the economy does move rather slowly, shouldn't the Bush 43 administration have seen all of this sort of unfolding? Obviously, they couldn't see the stimulus bill and what impact that had. But was the Bush administration slow to react so that, in some ways, you got to take responsibility?
ROVE: Well, look, in early 2008, there was a bipartisan stimulus bill passed. What happened, though, was the -- the minor -- you know, the downturn in the economy was made much, much worse, significantly worse by the implosion of Fannie and Freddie in the summer of 2008. This was something that the -- the Bush administration started working on in February of 2001, got a bill through the Senate Finance Committee after four years of very hard work, only to have it filibustered by Senator Chris Dodd, who incidentally, had as one of his fellow filibusterers the newly elected senator from the state of Illinois, Barack Obama. Barack Obama and Chris Dodd ultimately, and Barney Frank, the other villain in this drama, ultimately all voted for that reform bill that Bush had been pushing since 2001, but in September of 2008, after Fannie and Freddie had gone belly up.
So look, there was going to be -- there was a minor downturn. There was a downturn of some nature in 2008. Congress saw it coming. The administration saw it coming. And they passed a stimulus bill. But what Democrats blocked us from coming and -- and dealing with and which a lot of people didn't understand the magnitude of the problem was the collapse of Fannie and Freddie.
You know, they were leveraged at the end between 60-to-1 to 78-to-1, which means that a decline in value of the underlying mortgages that they held, $5.4 trillion worth of mortgages -- a decline of 1.3 percent would bankrupt the companies, and that's exactly what happened.
VAN SUSTEREN: Karl, thank you, as always.
ROVE: You bet. Thanks, Greta.
Transcript via Nexis Lexis.